Economics Chapter 6 - 7

Which feature is a characteristic of a market economy?

• Government planning plays a key role in the economy

• Producers respond automatically to changes in consumers demand

• Resources are allocated according to need

• There is always full employment

A country changes from a planned to a market economy. What effect will this have?

• A decrease in government officials

• A decrease in the role of the price mechanism

• An increase in government ownership of resources

• An increase in the output of public goods

What is the role of the price mechanism in a market economy?

• To allocate scarce resources

• To increase the provision of merit goods

• To make the distribution of goods and services more equal

• To reduce the negative disadvantages of production and consumption

What is measured on the horizontal axis of a demand curve?

• Cost

• Price

• Supply

• Quantity

What could cause the movement from point X to point Y?

• A change in weather

• A decrease in income

• A rise in the price of chocolate

• A special event is coming up

Which pair shows that the products are complementary goods?

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What product that the demand will decrease when the consumers' income rises?

• Substitute goods

• Complementary goods

• Normal goods

• Inferior goods